Written by Corey Rosenbloom

…On Thursday we saw a standard “fade” or retracement trigger away from the highs for Amazon.com, Inc. (Nasdaq: AMZN). Let’s take a look at the pattern for your educational and planning resources.

…Amazon set up one of the most elegant intraday reversal patterns I’ve ever seen.

I run stock scans and publish the results to members, and Amazon topped our list of “Squeezed and Compressed Stocks Ready to Breakout.”

We can see what happened next with a multi-day rally and breakout from $860 to $920 in a week. That alone is a great educational resource in the “Range Alternation” principle of price behavior. Nevertheless, Wednesday gave us a shooting star bearish reversal candle (daily) and Thursday gave us a strong sell-day lower as price retraced down from the $920 achieved high.

While the pattern (reversal candle above upper Bollinger) is impressive, the lower timeframe reversal is stellar:

…The lengthy negative divergence in an overextended market gave way to a beautiful – and textbook – Rounded Reversal pattern. The minimum target for a Rounded Reversal is the beginning of the pattern (arc) and price achieved that…[yesterday] into the $905 level and, after a double-bounce, sellers once again took over the market and pressed price beneath $905 toward $900.

With the elegant intraday Rounded Reversal complete, continue watching the daily chart and signs for any additional weakness beneath $900 should buyers fail to step in and support price at the $900 “round number” pivot.

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